Jenkins Company began business in June when stockholders invested $80,000 in the business,which in turn issued its common stock to them.Jenkins Company then purchased a building for $40,000 cash and inventory for $20,000 cash,performed services for clients for $10,000 cash,purchased supplies for $5,000 cash,and paid utilities of $2,000 cash.What is the amount of Cash at the end of June?
A)$20,000
B)$23,000
C)$30,000
D)$43,000

Question

Quizplus · Accepted Answer

The total cash inflows are $10,000 from services performed. The total cash outflows are $40,000 for the building, $20,000 for inventory, $5,000 for supplies, and $2,000 for utilities, which equals $67,000. Therefore, the ending cash balance would be $80,000 (initial investment) minus $67,000 (outflows) which equals $13,000. However, the question is asking for the amount of cash at the end of June, so we need to add the remaining cash balance of $10,000 from services performed. This gives us a total of $23,000 in cash at the end of June.

Jenkins Company Began Business in June When Stockholders Invested $80,000